Rotarians gain insight into the Indian equity market
Soumendra Nath Lahiri
Soumendra Nath Lahiri, Senior Vice President and Fund Manager, DSP ML Mutual Fund, obtained a Bachelor’s Degree in Mechanical Engineering and a Post Graduate Diploma in Management (PGDM) from the Indian Institute of Management (IIM), Bangalore.
He is the Equities Head at L&T Investment Management. He manages L&T Equity Fund, L&T Infrastructure Fund and L&T Emerging Businesses Fund and assets in excess off R5,000 crores in equities.
Lahiri opened the discussion by taking Rotarians through India’s current economic state. “Since the elections in 2014, there has been a gradual improvement in the country’s economic state. We are not saying that the government will make changes overnight, but rather adopt a brick-by-brick approach towards development. What is also happening is if you look at things globally, the U.S. is perhaps the only engine of growth among the developed countries right now. Countries like Europe and Japan are in a bout of slowdown, as is China. So globally, India appears to be standing out in terms of technological and economic growth when compared to most developed countries. We expect the growth rates in investments to start picking up this year onwards. Long-term investments are bound to show results slowly, so the current trend we are seeing is in cyclical investments, growing steadily in the market.
“In the coming years, you will see more and more being invested into equity markets. Valuations today are at the long period average and as the numbers start falling into place, one should start seeing an improvement in the markets,” he said.
He briefly addressed the subject of recession and the aftershocks suffered by our economy in the last two years. He said, “In the last four to five years, growth was driven by the consumption side of the economy. Growth had bottomed out now and the last two years have indeed been very painful for India. Growth rates were below 5 per cent and when you look at most parameters, the numbers have been volatile and choppy. However, they have improved over time and commercial vehicle growth has been the biggest indicator of that with the trend only moving upwards. Freight rates have increased, electricity generation is looking up, so clearly most parameters you take as anecdotal evidence of growth seem to be looking up and that is what we believe will be the driver for growth in an investment-led economy.”
Markets are driven by earning and Lahiri discussed how the earnings of corporate India over the last couple of years have affected the bigger economic picture. “We have gone through three major phases — from 2001 to 2007, Indian witnessed a period of very strong economic growth with high returns; from 2008 to 2014, with the global economic crisis, markets have been very slow and sober with the returns; currently, in the third phase, our expectations are to re-enter the growth phase and seek a 16-17 per cent compounded growth. As we speak, markets are reaching an all-time high and returns are expected to be the same,” he concluded.